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The American's Creed

I believe in the United States of America as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign nation of many sovereign states; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes.

I therefore believe it is my duty to my country to love it; to support its constitution; to obey its laws; to respect its flag; and to defend it against all enemies.

“Nearly a quarter of those who turn 50 this year say they haven’t even started saving, according to a poll in January.”

I would be curious to know what percentage of that percentage have…

• a new (non economical) car?

• a boat?

• an expensive home (“expensive” meaning higher priced for their particular area of the country)?

• a budget?

• are turning down a company match?

• COULD save money but REFUSE to?

I know, I know,…I’m being judgmental. I don’t mean to be. I just find it hard to believe that that many people haven’t put anything away for retirement.

I suppose a positive way to look at this is that lots of those people are going to be working a long time, which will help stave off the employee crunch we were supposedly going to face when Boomers began retiring in droves and there weren’t enough in the younger generations to take their place.

For those of you just starting out in life, PLEASE HEED MY ADVICE:

Start saving for retirement NOW! Make it a PRIORITY! Before you know it, you’ll be 50-years old. You don’t want to waste all those years of potential compounding of your retirement funds.

It’s a blanket statement but you’re probably not too far off the mark.

Another big problem that I see, especially with some of my family members, is money wasted on the lottery. That’s why I found this article to be a clever way to take advantage of that, for the better. It’s brilliant!

By the way some of these non savers do have a 70K boat, more cars than they need at a cost greater than necessary, credit card debt beyond payment, remodeled kitchens & baths, or a weird belief that the world will end soon and so there’ll be no need to have any money.

I find that most people fail to understand how much they need for retirement. When they find out the figure, they are stunned.

The only good thing to come from this recession is people will begin saving again. This recession will not be like past where it is over in a year. We are in a debt deleveraging or balance sheet recession, which tend to last for several years. These kinds of recessions change people’s behavior.

Well, 1-4 on your list above seem to be mostly subsumed into #6 – namely, they’ve chosen to do something other than save money that they could have. #5…#5 would interest me. Now, if they aren’t putting anything aside anyway, a company match is useless (matching zero is still zero…) but now I’m curious…have you ever known anyone to just turn down a company match? That seems like throwing away money!

We all know there are spenders aplenty or should I call them “non-savers” to be PC. I thought w/this downturn more people were starting to “get it” but I believe one huge blind spot is college for the kids. Yes, we beat it to death last week, but too many people are oblivious to what it means for the PARENTS to take on the student loan debt. Sorry boys, mom is not going to sign for your loans, but I’ll bust my butt working to save what I and your dad can in your 529s to get it done for you!! The rest is up to you w/scholarships, working, saving your birthday and CHRISTMAS money, etc.

The current level of unemployment is the final nail in the non-savers’ coffins. I’ve never seen so many 1099-Gs while doing taxes as I have this year. It breaks my heart to see hard-working people so beaten down b/c they can’t find a job (and have teens or college-aged kids, children about to get married, etc.) When you’re used to being the breadwinner (temporarily?) losing your earning power sucks of course, but the accompanying demoralization is a close second. In some cases it is the worst part.

So where are all the Green Jobs and other wonders we were promised to get out of this spiral? We need a recovery w/legs and we need it now.

Well, let’s face it; 70 is the new 50. Many people I talk to have already accepted the fact that they are not going to retire anytime soon. What exactly do they have to look forward to in retirement anyway? Social Security and Medicare are going broke. Interest rates are at the lowest I’ve ever seen. The way I see it you have two types of people: those that dream about retirement, and those that plan for it. I feel especially bad for those that relied on their pension plans, only to see them evaporate slowly.

I think Kirk is right, though. Every good financial crisis is followed by a financial awakening, and I think more people are beginning to take control of their finances. Sadly, for many, this awakening is happening far too late for them to have any real chance of benefiting from it. So perhaps we can hope for the next generation not to make the same mistakes.

By the way, does anybody really think these new credit card rules are going to help people who use them regularly? You can borrow for college, but you can’t borrow for retirement — or can you?

Good commentary…except the people won’t be working due to Social Security rules (if SS is still around) if you are on SS you can’t make more than a certain amount of money every year…so much for the poor people.

Jon, once you reach full retirement age the rules change. It’s when you’re taking SS and working when you’re YOUNGER than your FRA that you run into giving lots of your SS$ back via taxes.

Lately I’ve been seeing people getting anywhere from $14K-$19K on their year-end ss stmts. I actually saw one client have well into $20K–the highest I’ve ever seen.

Some, like my parents, need the money while others don’t, but I will never be the one to propose taking it away from the latter group. For once it would be nice for someone who made good choices not be penalized for them to subsidize someone who didn’t have a good end result, regardless of the reason why.

And yes, it’s a tax w/no guarantee of benefits, just a promise…yada, yada, I get it!

I don’t understand. I’ve been wondering about this for a while. What, exactly, will happen to the masses that don’t have any retirement savings? I constantly struggle and plan for retirement (in my 50’s), and see many that don’t. Will they actually starve? Will the government (aka, my meager savings) support them? Right now, in this country, if you can’t support yourself, you are supported? What will happen in 15 or 20 years? Is it really necessary to scrimp and save when nobody else does? What is the consensus?

I, too, have pondered this. Having been a Scout I still live by “Be Prepared” but somehow I think we the savers (ok, taxpayers) will be hosed again for the lack of planning by the screwballs.

So have dessert and enjoy life and take that dream trip. What kind of nursing home do we want to end up in…one that’s ok, one that’s great, or the one that everyone on Medicaid is on the list for? For some there is a definitive answer. For me…well…if it all comes down to a cinder-block room in the end, with a bed, a chair, and a tv will any of it matter? Carpe diem!

So eat the brownie, save what you can and know we’ll all basically be in the same place in the end.

Randy and Stacy (#13 and #14), I think the answer to your question may be to look at Greece. All the strikes and rioting and demonstrations there are coming from the Greek population that is being asked (forced) to accept lower standard of living because the current level of Gov’t benefits is no longer sustainable. I fear that we will be seeing the same thing elsewhere in Europe and the US eventually.

Frightening stats for sure, but unfortunately, seems to mirror many of my 40 and 50-something friends and family – either no retirement savings or hardly any retirement savings at all. Some of these people that I know don’t earn much and therefore feel like there isn’t much to save, but others earn salaries of upwards of $100K – $150K and still don’t save much other than the minimal 401K contribution, which they will play around with in the market and shut off when they are not feeling flush. I know a couple of such families, where the 401K balance is maybe $100K – but these are families where the breadwinners are pushing 50, and they are living a $100k/year lifestyle… nice suburban homes, 2-3 cars, an R/V in the garage, trips to Disneyland, b-day parties w/the works for the kids, etc.

A number of reasons exist for this behavior: (1) They figure there will always be time to catch up when the kids are grown and the wife can go back to work; (2) They have never sat down to figure out what retirement is really going to cost – its too scary; (3) Peer pressure – they live in areas where everybody acts this way; (4) Inheritance expectation – they are under the delusion that there will be something left to inherit when their aging parent expires. (5) Home equity – the fuel of spenders everywhere.

I could go on, but it just constantly amazes me how illogical, seemingly educated, profession people can behave when it comes to personal finances. Bottom-line, they are really pushing this problem off onto their kids – that is who will have to support them in their old age. Seems to be a time-honored tradition in our society that we kick the can as far down the road as far as we can, so we don’t have to think about the future.